Every month I calculate my net worth and then publish it. While the exact figures of my wages are not disclosed, what it does to my net worth, is. This month I am so close … !

Where I work we receive our overtime 1-2 months after we actually work the hours, due to how the payroll operates and how claim cut-off dates affect claim periods. Therefore this month I am seeing the fruits of my labour from the last part of August and the beginning of September.

The graph speaks for itself.

The last little bit is just there to tease me I am sure. Flicking back through my budget for the previous 10 months there are so many places I could have shaved off that amount if I had really, really put my mind into it just a few more percentage points. If I hadn’t gone on holiday to Cyprus in April, for example. Sure the holiday itself was free – no flights or hotels to pay for – but I took over £1,000 in spending money and guiltily spent the lot.

But, there is little point in crying over spilt milk. What is done, is done.

According to one (of my many) mighty spreadsheets, this means next month is freedom month – assuming my car does not blow up in the meantime of course.

You may remember that last month I was going to attempt to make an additional £1,252.16 to bring forward the pay-off date a month nearer still. I nearly made it, but fell short by £653.58 as can be seen above.

Darnit.

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Every month I calculate my net worth and then publish it. While the exact figures of my wages are not disclosed, what it does to my net worth is. This month I remain in debt, but my net worth continues to rise.

The rise was partially due to an unexpected boost this month – I received my cost of living increase (2.5%) backdated to April, as well as the expected overtime payment.

The end result is I took home far more than I’d calculated last month. You can see from last month’s post that I was not going to have a positive net worth until December 2009. This was still ahead of my New Years Day target, but cutting it a little fine.

This month’s spreadsheet appears a little rosier. Last month I owed almost £5,000 more than I had. This month that has reduced to £2,812 – very nearly half my previous month deficit!

Come November payday I will be debt free, if all goes according to plan. If I can make up an additional £1,252.16 between now and then, it may even be earlier than that. I am working hard to try and make that a reality.

I’m not out of the woods yet, but I’m getting there slowly.

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If you caught the first post in my ‘Dig Yourself Out of Debt‘ series last week, you will  know how important I think it is to know exactly where you stand in terms of your total immediate unsecured liabilities, and any cash reserves you may have. Now, before the uber-observant amongst us say anything – yes I realise that ideally if you have cash reserves you would pay down debt! Afterall, the interest you are probably earning on any positive balance from cash is likely to be dwarfed by the loan or credit card APR.

All that said however, you may like me be stuck with a front-loaded loan that offers no benefit of repaying early (other than to see the back of the loan) and no option of making over-payments. The only option in that scenario is to save up the lump sum necessary to pay off the balance (plus the penalty of one month’s worth of interest) if you want rid of it early – which I do.

At the end of my own ‘Know What You Owe’ fact-finding mission, I did some simple math and came up with my ‘net worth’ (net worth literally just means how wealthy you are), and it’s really easy to figure out.

Add up everything you owe (liabilities), and subtract that amount from any cash and savings you have. Whatever you are left with is your net worth. Simple!

I wanted to know how I was getting on with meeting my own debt freedom target (no later than New Years Day 2010) so I dug out copies of my loan account payments, credit card and bank statements, payslips and my budget spreadsheet, and made myself another spreadsheet with a few simple formulas thrown in to make things easier. Nothing too crazy required, just a couple of simple =SUM() calculations in certain cells to make the laborious leg work a little less laborious…:

The current month is highlighted in bold. Taking my other liabilities into account (the last £203 on my Barclaycard credit card), you can see my total liabilities at the moment are £9,156. But, I have £4,204.51 in cash in a combination of my current and savings accounts. Subtracting total liability from total liquidity, my networth is currently -£4,951.49. Basically, I owe almost five thousand pounds more than I have.

Scroll down a few months into the future however, and things improve. By November I’m only £220 shy of breaking even. In other words, I am currently set to become debt free by 20th December (A full 12 days ahead of target). If I make up that small shortfall, that could drop back to 20th November, 6 weeks earlier than planned. Assuming I don’t get made redundant between now and then and my overtime plans come off, I could knock a couple more weeks off that.

One word of caution though: remember that any entries beyond the present are projections. If you are projecting your own, remember that things often conspire against you; If my car blew up tomorrow, I would have to use some of my cash to fix it, pushing me away from the projected freedom date. Use it as a ready reckoner however and we can see that if all goes well using current known-good data (e.g. the data up until the highlighted line), I won’t be any later than my target, and that was the whole point of this exercise.

Are you currently in negative networth? Do you even know with any certainty? Kudos if you do. You’re not in the minority if you don’t though. Take the first step to digging yourself out of debt and know what you owe. Once you know, you can work out your own net worth and project a date to get into positive growth (or be incredibly unscientific about it and just make up a date like I did!).

If you’re already digging, how is your own target prediction holding up?Leave a reply in the comments below.

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